Business
US options market grapples with ‘concentration risk’ in clearing
Every listed US options trade goes through The Options Clearing Corp., a central counterparty that handles more than 70 million contracts a day during busy periods. The trades are submitted to the OCC by its members-who help trades get to the clearing house and act as guarantors in case their clients go bust.
There’s a small group of firms at the top. Out of dozens of members, the top five contributed almost half of the OCC’s default fund in the second quarter of 2025. Market participants cite Bank of America, Goldman Sachs Group and ABN Amro Bank NV as the three biggest, handling most positions from market makers, who take the other side of almost every options trade. The fact so much volume goes through such a small number of firms raises the risk of widespread losses if one of them should fail.
“I think there is significant concentration risk in clearing intermediation,” Craig Donohue, chief executive officer of Cboe Global Markets, said, without naming specific banks. “I do worry about that.”
The risk of a major bank failing is unlikely – but not unheard of. Donohue has his own battle scars from a clearing member default: in October 2011, when he was CEO of CME Group, MF Global declared bankruptcy.
